More Stories

Informist, Friday, Feb. 21, 2025

 

MUMBAI – Reserve Bank of India's former governor Duvvuri Subbarao said that there is a need to review the inflation targeting framework, but it should not be discarded. 

 

"In a pre-inflation targeting framework, I believe the inflation targeting framework has been a force for good. So, I don't think we should throw it away. But we should see how to manage the concerns of growth and inflation and how to balance the trade-off," he at the IIMK-NSE 2nd Annual Conference on Macroeconomics, Banking and Finance.

 

While announcing the Monetary Policy Committee's meeting's outcome in February, RBI Governor Sanjay Malhotra said that they plan to make certain changes to the flexible inflation targeting framework, as it was last reviewed in 2021.

 

"We will continue to improve the macroeconomic outcomes in the best interest of the economy using the flexibility embedded in the framework while responding to the evolving growth-inflation dynamics. Moreover, we will strive to further refine the building blocks of this framework by making advances in the use of new data, improving nowcasting and forecasting of key macroeconomic variables and developing more robust models," Malhotra said.

 

As part of the MPC statement released on Feb. 7, RBI projected CPI inflation for Jan-Mar at 4.4%, 2024-25 (Apr-Mar) is projected at 4.8% and assuming a normal monsoon, CPI inflation for the financial year 2025-26 (Apr-Mar) is projected at 4.2%. According to latest data released on Feb. 12, CPI inflation fell to a five-month low of 4.31% in January, lower than expectations of 4.5%. Inflation has fallen nearly 200 basis points since October.

 

India's GDP growth fell sharply to a seven-quarter low of 5.4% in the quarter ended September due to a slump in the growth of industrial activity, as per data released by the National Statistical Office. The Indian economy had grown 8.1% a year ago and 6.7% a quarter ago.

 

He also said that the central bank has three main objectives — price stability, growth, and financial stability with price stability taking the highest priority over the other two. However, he said that once inflation is within the target range, the RBI should shift its focus to financial stability and growth concerns.  End

 

Reported by Kshipra Petkar

Edited by Deepshikha Bhardwaj

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.